Studies examining what factors influence relevance of reported numbers in financial statements is becoming increasingly important in the accounting and finance literature. This is an important area for regulators in particular. An understanding of what factors contribute to or detract from value relevance of accounting numbers is essential in the light of globalization that has resulted in inte...

We examine whether and why companies prefer fair value to historical cost when they can choose between the two valuation methods. With the exception of investment property owned by real estate companies, historical cost by far dominates fair value in practice. Indeed, fair value accounting is not used for plant, equipment, and intangible assets. We find that companies using fair value accountin...

This paper studies accrual accounting and equity valuation in the context of a firm that makes repeated and overlapping investments in productive capacity. The analysis identifies a particular accrual accounting (depreciation) rule which is termed replacement cost accounting because the book value of existing capacity assets is set equal to the value that such assets would have if a competitive...

Stakeholder inclusion in organizational decision making, and the resulting issue of value creation, is one of the thorny problems that stakeholder theory has sought to address. Yet progress has been slow, we suggest, because present accounting theory and practice does not address the decision-making needs of all stakeholders who are at risk due to the activities of organizations. In this paper ...

We investigate the changes in the value relevance of accounting information among Chinese firms over the past two decades, during which accounting reforms are launched to provide decision makers with increased disclosure and higher quality financial information. We also investigate the factors that differentiate firms showing significant value relevance improvement from firms showing little imp...